Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Bottom-Up

<ul>
<li>In this insight, we discuss a pair trade of going long on CJ ENM and going short on HYBE. </li>
<li>CJ ENM's valuations are much more attractive and offer higher value as compared to HYBE. CJ ENM shares are trading at EV/EBITDA of 2.7x versus 10.9x for HYBE in 2023. </li>
<li>The Korean government is likely to require BTS members to conscript for military service which is likely to lead to sharp decline in earnings estimates for HYBE.</li>
</ul>


In this insight, we discuss a pair trade of going long on CJ ENM and going short on HYBE. 
CJ ENM's valuations are much more attractive and offer higher value as compared to HYBE. CJ ENM shares are trading at EV/EBITDA of 2.7x versus 10.9x for HYBE in 2023. 
The Korean government is likely to require BTS members to conscript for military service which is likely to lead to sharp decline in earnings estimates for HYBE.


Korea Consumer Discretionary: A Pair Trade (Long CJ ENM and Short HYBE)

Korea / Special Sits, Pairs, Index Rebalancing, Clepsydra Capital

Sanghyun Park

Korea / Special Sits, Pairs, Index Rebalancing

Clepsydra Capital

Investigate special situations, pairs, and index rebalancing trades in Korea.

Event-Driven

<ul>
<li>The ETF operator (TIGER)'s index tracking conformity was high enough to create trading opportunities aimed at the rebalancing flow.</li>
<li>Flow/Price directions were mostly synched with only a few exceptions. Of particular importance is that the price impact was substantial compared to the passive flow size. </li>
<li>The yield of the tradable names suitable for a basket based on the projected passive impact size was 4.51%.</li>
</ul>


The ETF operator (TIGER)'s index tracking conformity was high enough to create trading opportunities aimed at the rebalancing flow.
Flow/Price directions were mostly synched with only a few exceptions. Of particular importance is that the price impact was substantial compared to the passive flow size. 
The yield of the tradable names suitable for a basket based on the projected passive impact size was 4.51%.


WISE Theme Indexes Rebalancing: Conformity of Passive Flow to Price Return

<ul>
<li>Today is the rebalancing trading day of WISE's three major theme indexes. The ETF operator (TIGER) is expected to start rebalancing trading after 2 pm.</li>
<li>The prediction accuracy of the top market cap stocks is relatively high. So, we should target these big boys with a flow at 0.2x or higher relative to ADTV.</li>
<li>Names in a basket trade setup: <a href="https://www.smartkarma.com/entities/ecopro-bm-co-ltd" target="_blank" data-smartkarma-citation="entities:27873:1" rel="noopener">Ecopro BM (247540 KS)</a>, <a href="https://www.smartkarma.com/entities/sk-ie-technology" target="_blank" data-smartkarma-citation="entities:29207:1" rel="noopener">SK IE Technology (361610 KS)</a>, <a href="https://www.smartkarma.com/entities/solus-advanced-materials-co-ltd" target="_blank" data-smartkarma-citation="entities:28947:1" rel="noopener">Solus Advanced Materials (336370 KS)</a>, <a href="https://www.smartkarma.com/entities/hana-tour-service-inc" target="_blank" data-smartkarma-citation="entities:4852:1" rel="noopener">Hana Tour Service (039130 KS)</a>, &amp; <a href="https://www.smartkarma.com/entities/cj-enm" target="_blank" data-smartkarma-citation="entities:8887:1" rel="noopener">CJ ENM (035760 KS)</a>
</li>
</ul>


Today is the rebalancing trading day of WISE's three major theme indexes. The ETF operator (TIGER) is expected to start rebalancing trading after 2 pm.
The prediction accuracy of the top market cap stocks is relatively high. So, we should target these big boys with a flow at 0.2x or higher relative to ADTV.
Names in a basket trade setup: Ecopro BM (247540 KS), SK IE Technology (361610 KS), Solus Advanced Materials (336370 KS), Hana Tour Service (039130 KS), &amp; CJ ENM (035760 KS)



WISE Theme Indexes Rebalancing Today: Names in Basket Trade Setup

Private Capital Markets

Kakao Entertainment  / Private Capital Markets

<ul>
<li>Kakao Entertainment is one of the biggest entertainment companies in Korea. The company has a strong IP for webtoons, web novels, music, drama, movies, and other digital contents.</li>
<li>Kakao Entertainment is a company that was formed from a merger of Kakao Page and Kakao M in March 2021. </li>
<li>Kakao Corp (035720 KS) is the largest shareholder of Kakao Entertainment, followed by Anchor Equity Partners, and Tencent.</li>
</ul>


Kakao Entertainment is one of the biggest entertainment companies in Korea. The company has a strong IP for webtoons, web novels, music, drama, movies, and other digital contents.
Kakao Entertainment is a company that was formed from a merger of Kakao Page and Kakao M in March 2021. 
Kakao Corp (035720 KS) is the largest shareholder of Kakao Entertainment, followed by Anchor Equity Partners, and Tencent.


Kakao Entertainment: A Korean Entertainment Powerhouse

<ul>
<li>Among the local theme indexes in Korea, we have three noteworthy ones for July. They are the WISE theme indexes. They will all rebalance on July 15.</li>
<li>Due to some constituents' recent significant price movements, we can now expect some notable passive flows.</li>
<li>These names are worthy of our attention: SKIET, Solus Advanced, Kangwon Land, Hanatour, T'way Air, Yong Pyong Resort, HYBE, CJ ENM, and Studio Dragon.</li>
</ul>


Among the local theme indexes in Korea, we have three noteworthy ones for July. They are the WISE theme indexes. They will all rebalance on July 15.
Due to some constituents' recent significant price movements, we can now expect some notable passive flows.
These names are worthy of our attention: SKIET, Solus Advanced, Kangwon Land, Hanatour, T'way Air, Yong Pyong Resort, HYBE, CJ ENM, and Studio Dragon.


WISE Theme Indexes (TIGER ETFs): Rebalancing Flow Estimations

South Korea

Hyundai Home Shopping Network Corporation  mechandises consumer products. The Company's products include clothes, home appliances, food, and luxuries. Hyundai Home Shopping retails through TV home shoppoing channels, catalogs, and the Inte rnet shopping mall.

Hyundai Home Shopping Network (057050 KS)

ISE Commerce Co., Ltd. provides overseas online shopping service.  The company allows customers to buy overseas items with foreign registered credit cards acting as buying agent on behalf of them.  The service also includes local language description and delivery.

YES24 Co.,Ltd is an on-line retailer.  The company markets and sells books. The company also provides online advertising service.

Lotte Shopping Co., Ltd. operates department stores and discount stores in South Korea.  The Company retails clothing, household goods, foods and other items through several branches.  Lotte Shopping also operates supermarkets and movie theaters.

Shinsegae Co., Ltd. operates department stores in South Korea.  The Company retails food, clothing, household goods, electronics, and other items through several branch stores.

Hotel Shilla Co.,Ltd operates and manages hotels in Seoul and Jeju. The Company also operates duty free shops, bakeries, restaurants, and catering and laundry service businesses.

Hyundai Department Store Co., Ltd. operates department stores under the name of Hyundai Department over nationwide.  The Company also produces home shopping programs for cable channels and sells merchandise through home shopping programs.

Shinsegae International Co., Ltd. was spun off from Shinsegae in 1996.  The company imports and distributes famous foreign brands and manufactures/distribut es domestic brand.  The Company's line of business includes the wholesale distribution of men's and women's apparel.

Cuckoo Homesys Co. Ltd. manufactures kitchen appliances. The Company produces and sells electric pressure cookers, dishwashers, blenders, water purifiers, and other products. Cuckoo Homesys also provides kitchen appliances exporting services. Cuckoo Homesys markets its products worldwide.

Kolao Holdings retails new and used cars, and provided repairs and maintenance services in Laos.  The company also retails motorcycles and automobile parts.

ASKUL Corporation sells office equipment products to medium and small sized business offices via the Internet and facsimiles.  The Company provides next day delivery services throughout Japan.

eDreams ODIGEO SA is a European online travel company.  The Company offers flights, hotels, vacation packages, train tickets, and car rentals with localized sites across countries worldwide.

Infibeam Avenues Limited operates as an e-commerce platform. The Company focuses on e-retail business including home and lifestyle products, books, automobile accessories, electronics, watches, health equipment, jewelry, footwear, apparel, baby products, movies, music, posters, magazines, toys, and gifts. Infibeam Avenues serves customers in India.

Jumia Technologies AG provides e-commerce services. The Company offers on-line products as well as delivery of packages to the consumers. Jumia Technologies serves customers in Germany and Africa.

Takkt AG provides one-stop shopping for equipment, supplies, and accessories for offices and warehouses.  The Company's products include office furniture and accessories, file systems, delivery carts, and related supplies.  Takkt offers its products through CD-ROMs, catalogs and the Internet, and operates throughout Europe and North America.

AO World PLC retails a range of home appliances. The Company sells refrigerators, freezers, dishwashers, washers/dryers, and other small appliances.

Despegar.com, Corp. provides online travel booking services. The Company offers online hotels, car, flights, vacation rentals, packages, and ticket booking services. Despegar.com also provides an online platform to compare tickets and packages.

1-800-FLOWERS.COM, Inc. is an e-commerce provider of floral products and gifts. The Company's product offerings, including fresh-cut and seasonal flowers, plants, floral arrangements, and home and garden merchandise, can be purchased online or by calling its toll-free telephone number.

Overstock.com, Inc. offers discounted brand-name merchandise for sale over the Internet. Products include bed-and-bath goods, kitchenware, jewelry, sporting goods, electronics, and designer accessories.

zooplus AG retails pet supplies over the Internet.

CJ ENM, Ltd. retails clothes, kitchen utensils, home appliances, and jewelry.  The Company sells its merchandise through TV home shopping channels, catalogs, and the Internet shopping mall.  CJ ENM operates cable television business through a subsidiary.

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CJ ENM (035760 KS)

Korea Consumer Discretionary: A Pair Trade (Long CJ ENM and Short HYBE)

In this insight, we discuss a pair trade of going long on CJ ENM and going short on HYBE. CJ ENM's valuations are much more attractive and offer...

Douglas Kim

WISE Theme Indexes Rebalancing: Conformity of Passive Flow to Price Return

This post provides the noteworthy points of the passive flow/price impact correlation from yesterday's rebalancing of WISE's three thematic indexes

Sanghyun Park

WISE Theme Indexes Rebalancing Today: Names in Basket Trade Setup

This post provides the latest flow estimations for WISE's three thematic indexes that rebalance today and suggests the tradable names in a basket...

Sanghyun Park

Kakao Entertainment: A Korean Entertainment Powerhouse

Kakao Entertainment is one of the biggest entertainment companies in Korea. The company has a strong IP for webtoons, web novels, music, drama,...

Douglas Kim

WISE Theme Indexes (TIGER ETFs): Rebalancing Flow Estimations

This post contains the estimations of the passive flows for the constituents of the three WISE theme indexes, which rebalance on July 14.

Sanghyun Park

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